The City of New York is trying to put the squeeze on illegal hoteliers, by raising the fines for first-time offenders dramatically, while focusing on the biggest offenders.
Last week, two City Council members proposed raising the fine for first-time offenders operating illegal hotels from $1,000 to $10,000, with a maximum penalty of $50,000. Council members Helen Rosenthal and Ydanis Rodriguez introduced the bill in an effort to more effectively deter illegal operators.
On the day the news broke about the proposed bill, Elan Parra, former director of the Mayor’s Office of Special Enforcement, spoke at a B’nai B’rith luncheon in Midtown, where he discussed in-depth Airbnb and illegal hotel conversions and the City’s efforts to stop them.
Parra believes there is a place for short-term rentals — but not in overcrowded and unsafe apartments in New York City.
There are around 20,000 Airbnb listings in NYC, Parra said, and he estimated that 99 percent of people using Airbnb don’t know that it is illegal. “It’s a misnomer to say it’s just an Airbnb issue,” said Parra. “It’s not just Airbnb, there’s Flipkey, HomeAway, Hostels.com, and more traditional websites like listings on craigslist and listservs and Facebook.”
In 2014, the city responded to 1,157 complaints, and 1,200 violations were issued as a result on-site inspections by the Office of Special Enforcement.
From January to April of this year, there was a 39 percent increase year-over-year in violations, and so far this year, a 77 percent increase, said Parra. Ultimately, the city is focusing on the biggest offenders of illegal hotel use, like David Jaffee, a socialite who turned several apartments into illegal hotels, in some cases packing 20 bunkbeds into two-bedroom apartments and charging $35 a night.
Jaffee was eventually evicted from three apartments he was illegal subletting, including a luxury two-bedroom apartment at 301 East 47th Street. Parra said Jaffee put signs on the backs of the front doors of the apartments warning the subletters not to open the door to anyone, and even had a photo of Parra, who he knew was after him.
Parra acknowledged that it would be difficult for the city to go after every single Airbnb user in New York City.
It has become a tricky subject for city leaders, too, with Airbnb campaigning that it helps everyday New Yorkers pay the bills.
“Politically, I don’t think anyone would want to (go after Airbnb),” said Parra.
In January, representatives of Airbnb spoke before the City Council and said that a crackdown would hurt New Yorkers who were full-time occupants of their apartments who rented extra rooms to make more income.
Parra, who is starting a new job at an advisory firm where he’ll again be in an investigative role, urged building owners to take precautionary measures to prevent illegal use in their properties, like watching if packages are coming in and, lots of people coming in and out, and monitoring the building’s video surveillance.
Judy Paul, CEO of the Washington Square Hotel, said she believes Airbnb is a threat to the hospitality business, and though illegal hotels have always existed, the growth of websites like Airbnb is concerning.
“We definitely see them as competitors to the hotel business. The main issue we have with Airbnb is they don’t operate on same playing field,” said Paul.
She cited occupancy tax, fire and health regulations, elevator and the DOB regulations intended to keep guests safe, that illegal hotel users don’t have to take part in.
“We understand it’s still a niche, and prices got so high it left an opportunity for Airbnb to do this,” she said. “Families can provide accommodations that hotels cant’ necessarily do, like have a whole apartment to themselves.
“But it’s still illegal, and there are definitely safety issues.”